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Limited Liability Companies


Below you will find frequently asked questions regarding Limited Liability Companies.


* MaddreyMix is intended to provide some quick information for general educational purposes only. For answers to your specific questions, please give us a call so we can enter into an attorney/client relationship and help you with your particular situation.


Can an LLC protect me from a lawsuit?


A Limited Liability Company (LLC) is one tool that can help protect individuals from lawsuits, but they are not magic bullets.

An LLC prevents personal liability for an action taken in the course of business of the LLC. However, the assets of the company are always available to satisfy a judgment or verdict.


If you treat your LLC improperly (such as by co-mingling money or other transgressions) the court may hold that the LLC is just a shell and will discard the limited liability of the company. This is called “piercing the veil” and it means you will be personally liable for damages.

Who owns an LLC?


An LLC is owned by its members.

A member of an LLC is someone who has membership and ownership interest in the LLC. Members are to an LLC as shareholders are to a corporation. There are single-member LLCs and multi-member LLCs. In a single-member LLC, the one member is the sole owner and thus has exclusive control of the LLC. Whereas in a multi-member LLC, there are multiple members who share control of the LLC.

Furthermore, there are two types of management structures for an LLC. Where an LLC is member-managed, all members help run the LLC. With a manager-managed LLC, however, the members elect someone, who need not be a member, to manage and control the LLC.

What is the difference between an LLC and a DBA?





  • Separate legal entity
  • LLC, not the individual, is liable for debts and obligations of the business
  • LLC name is the entity’s legal name
  • Higher registration fees because more protections afforded






  • Not separate legal entity
  • The individual who registers DBA is personally liable for debts and obligations of the business
  • DBA name is an “assumed name” of the entity
  • Lower registration fees due to fewer protections


What is the difference between an LLC and a C Corp?





  • Limited liability protection for business debts and obligations,
  • Informal management structure (i.e. no requirements for meetings, minutes, or resolutions required),
  • Pass-through taxation – taxes of the LLC “pass through” to the members/owners, who pay taxes on their personal income tax return,
  • Cannot issue shares of stock – owners have equity in the LLC,
  • Limited lifespan – LLC dissolves upon an event (i.e. member dies or declares bankruptcy) unless otherwise specified in the Company Agreement.






  • Limited liability protection for business debts and obligations,
  • Formal governance (i.e. board of directors meetings have to be held at least annually, minutes have to be taken at every board meeting, and resolutions of the board have to be recorded),
  • Double taxation – C Corporation is taxed on its earnings, and individual shareholders are taxed on dividends distributed to them,
  • Can issue shares of stock to attract investors,
  • Can exist perpetually, regardless of what happens to shareholders.


Can an LLC receive donations?


An LLC can receive money without the provider of that money expecting or being granted anything in return; however, that type of transaction would more accurately be called a gift than a donation.

Generally, the term donation implies that some tax-deductible payment is being made to a not-for-profit entity.

A traditional LLC can be gifted money, but the gift would be taxable income to the LLC and also subject to gift tax thresholds from the perspective of the gift giver. An LLC’s failure to properly document this type of gift can easily result in some troubling issues down the road as the gift giver may, from an outsider’s perspective, more closely resemble an investor or a creditor of the LLC than a benevolent third party that has no financial interest in the LLC’s ownership or obligations.

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